How to Report Mutual Fund Sales
You can choose from three methods to report the sale of mutual fund shares. Once you choose a method, you must stick with it as long as you own shares of that mutual fund. However, you can use different methods for different mutual funds
These are the three methods:
- Average basis — This is the average cost of all the shares you bought. To learn more, see the Average Basis Method — Mutual Funds tax tip.
- First-in, first-out — You assume the shares you sold were the first ones you bought. To learn more, see the First-In, First-Out Method tax tip.
- Specific share identification — You identify the actual shares you want to sell to minimize your capital gain or maximize your loss.
Also, when figuring the basis of your mutual fund shares, include these:
- Reinvested dividends
- Reinvested capital-gain distributions
- Net undistributed long-term capital gains
- Previously reported wash sales
To learn more, see Publication 564: Mutual Fund Distributions at www.irs.gov.
Not sure if you have to pay taxes on your scholarship? It depends on how the scholarship money is used. Learn more with the tax experts at H&R Block.
Would winning the lottery affect your taxes? Learn more about how your taxes could change after a Powerball payout with H&R Block.
Learn more about freelance income tax with advice from the experts at H&R Block.
Learn more about the FIFO method of selling shares and get tax answers at H&R Block.